HC Dismisses VAT Recovery Challenge With Exemplary Costs for making incorrect and false statements

The petitioner, a company registered under the Value Added Tax Act, 2003, challenged an email and recovery notice dated 09.12.2025 issued to its bankers for the recovery of VAT dues for the year 2011-12. The petitioner claimed that although it had filed its return for the said year, no assessment or demand had ever been communicated, and therefore, the sudden recovery action after 13 years was arbitrary.

During the hearing, the State produced Form 304, the assessment order, and the sales tax register, demonstrating that the assessment had been duly passed and served on the petitioner’s accountant. The petitioner thereafter attempted to explain that the order was received by the son of the accountant.

Main Issue: Whether a writ petition under Article 226 is maintainable to challenge recovery proceedings when a valid assessment order exists and false averments are made suppressing material facts.

HC’s Order: The High Court rejected the writ petition, holding that the petitioner had made incorrect and false statements by suppressing the existence of the assessment order. The Court found that the assessment had already been passed and served, and the petitioner had an efficacious statutory remedy of filing an appeal.

The Court, with misleading pleadings, disentitled the petitioner from any equitable relief under Article 226. The Court imposed exemplary costs of Rs. 10,000 on the petitioner for making false assertions and dismissed the petition.

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